Question
Pharoah company has four operating divisions. during the first quarter of 2022, the company reported aggregate income from operations of $212,200 and the following divisional
Pharoah company has four operating divisions. during the first quarter of 2022, the company reported aggregate income from operations of $212,200 and the following divisional results. Division ------------------------------------------------------------------------------------------------------- I II III IV Sales $247,000 $198,000 $499,000 $448,000 Cost of goods sole 203,000 192,000 295,000 250,000 Selling and administrative expenses 69,800 57,000 65,000 48,000 ---------------------------------------------------------------------------------------- Income (loss) from operations $(25,800) $(51,000) $139,000 $150,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 71% 88% 81% 76% Selling and administrative expenses 38 59 50 60 Discontinuance of any division would save 50% of the fixed costs and expense for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the division should be discontinued. a. compute the contribution margin for division I and II. ( enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started